TCS, Wipro to soon join HCL in $1 billion engineering services club

Indian IT behemoths TCS and Wipro are close to entering the $1-billion club in engineering services. HCL Technologies is currently the only Indian player in that league.Shilpa Phadnis | TNN | Updated: March 04, 2016, 19:40 IST

Tata Consultancy Services today said its brand value has jumped by over USD 1 billion in 2012, a growth of nearly 29% to cross the USD 5 billion mark.Indian IT behemoths TCS and Wipro are close to entering the $1-billion club in engineering services. HCL Technologies is currently the only Indian player in that league.

Globally, six service providers have crossed the $billion mark, led by French engineering consulting firm Altran with $2.16 billion in revenue in 2015, followed by another French engineering major, Alten, with revenue of $1.71 billion, as per a recent study by HfS Research.

Cognizant, Infosys, Tech Mahindra, Aricent, and L&T Technology Services also figure in the top 20 global providers' list, all having crossed $500 million in revenue.

Engineering services has emerged as a new growth engine for Indian IT services firms at a time when their mainstay businesses like application development and maintenance are getting commoditized leading to margin pressures. HfS categorizes engineering services into four segments --mechanical, embedded, software product and product lifecycle management services.

"As engineering services is transitioning from a niche offering to mainstream, there is great interest from the buy-side, investors, and sourcing advisors to better understand the industry structure, segments and key players,“ said Pareekh Jain, research director-engineering services at HfS Research.“European service providers often have a strong position in mechanical engineering services. Indian service providers tend to be strongest today in the embedded engineering and software product engineering segments."

Engineering services is one of the fastest growing segments within the Indian IT sector. It grew by 12.6% in 2015, higher than the 10.3% growth for IT services exports and 8.8% growth for BPM (business process management) exports.

Eight service providers, including five Indian ones -- Cyient, Persistent, Geometric, Tata Elxi and KPIT -- have reported engineering services revenue of over $100 million.